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Dealing with Disruption: IFSWF Annual Review 2017

Welcome to the IFSWF’s first annual review of sovereign wealth fund investment activity.

In the ten years since the inception of the International Forum of Sovereign Wealth Funds (IFSWF) and the Santiago Principles, the IFSWF has focused on raising the standards of governance and disclosure amongst the sovereign wealth fund (SWF) community, both within the membership and outside.

This review is a new effort to improve public understanding of SWFs. We have sought to provide reliable data and a factual analysis of how sovereign wealth funds directly allocated capital into global equity markets in 2017. We hope that this report will clarify many of the misconceptions about what sovereign wealth funds are and how they invest.

Our dataset reveals that, in 2017, SWFs completed more direct equity investments than they did in 2016 (303 versus 290), but that the value of these has largely stayed flat: $52.6 billion, compared to 2016’s $51.4 billion.

Consequently, their median equity cheque was $50 million, just over half that of 2016, which was $90 million. Excluding real assets, such as bricks-and-mortar properties and infrastructure projects, this trend was even more marked. In this case, the median equity investment was $27 million, plummeting from that of previous years: $60 million in 2016, and $58 million in 2015.

We observed four investment trends in sovereign wealth fund direct investment activity that may explain this observation: